When you mention employee evaluations in most insurance agencies, the owners begin to fidget, admitting that they do them sporadically, if at all. All too often, they admit that they give everyone the same percentage raise, hoping that no one complains. If a complaint occurs, the owner usually buckles and gives the complainer a little more (after all, the employee is valuable and the owner doesn’t want to lose them). And, in the worst-case scenarios, employees get raises only by pressuring the owners.
WHAT A WAY TO RUN A BUSINESS!
If we could make employee evaluations and compensation adjustments more objective and easier to conduct, would more agents perform them? That’s hard to say. Most agents feel that they’re very generous, whether they are or not. If they’re not generous, they usually use the agency’s financial woes to justify their failure to either evaluate employees or increase their compensation.
Reality Check:
- Employees work for two things — money and the feeling that they’re accomplishing something for which they deserve appreciation.
Evaluations are the formal communication from manager to employee about the employee’s performance. Managers who communicate and appreciate their employees often and informally sometimes feel that formal evaluations are redundant. They’re not!
Employees will usually tell you that money’s the most important thing. But we’ve seen too many good employees taking other jobs, even for less money, because of poor management. Other employees remain loyal to considerate and appreciative managers, even if they can make more money elsewhere. Employees describe money as their highest priority because they fear that failure to do so would dry up their potential income stream.
- Employees need money to provide for themselves and their families. If they feel that they’re performing well, they expect their remuneration to increase. Money’s the tool that tells employees if their manager’s performance evaluation converts to a more tangible measure of their success.
- The fact that employees don’t enjoy asset growth from the profitability of the agency means they don’t feel the agency’s performance should bear on their pay raises. What’s more, employees’ inability to control a number of agency expenses makes agency profitability an unfair measure of their compensation.
For more information on Incentive Compensation Programs, visit www.agencyconsulting.com and check The Pipeline archives for April 2000, April 2001, and December 2001.
WHAT SHOULD YOU EVALUATE?
Measure employees against the primary tasks and standards of their position — bearing in mind that employees with the same job title might have different responsibilities.
For example, the primary tasks of Personal Lines CSRs might include responding to the needs and requests of prospects and customers quickly and efficiently, providing accurate quotes, and selling at a specific hit ratio (Sales divided by Quotes). If one CSR has a 90% hit ratio and a second CSR in the same office has a 75% hit ratio, the first employee deserves a higher rating for their primary responsibilities. If the second employee does a superior job with such tasks as correspondence and filing, include this rating — but not as a part of their primary tasks. However, if the first CSR failed to meet their responsibilities for correspondence and filing, they wouldn’t receive an 'excellent' rating.
Every employee should receive a Job Description that defines each task required, together with a definition of acceptable or excellent performance of that task.
Evaluation is a difficult and complex task. But, realistically, the evaluation of employees separates managers from workflow coordinators — a supervisory but not management position. Employees deserve to be evaluated. They might think they’re doing well, but aren’t sure that their manager agrees. Most employees who are mediocre performers don’t think of themselves as such. Managers must handle evaluations in a professional, positive, delicate, and sensitive way that allows an employee to improve performance without damaging their ego to the point that they subvert the organization and manager.
Most important, employees must feel that their managers are treating them equitably. This means that measurements must be as objective as possible and that any criticisms must be creative and accompanied with documentation, not just vague references to things the manager senses about the employee. If an employee has an absence or tardiness problem, support your criticism with records of the dates of offenses. Similarly, if you have other issues regarding an employee’s performance in another area, support them with time-stamped examples to avoid the 'you did, too/no, I didn’t' syndrome.
The form you use to evaluate employees isn’t important as long as it provides ample space to both evaluate the employee’s performance for each major task of the job and to create a development plan to improve the employee during the next evaluation cycle.
Verify the primary tasks of the jobs shared by various employees. You have the right to add other tasks for any specific employee, as necessary. Also verify the measures of success for each task and evaluate your employee against those standards.
If you can’t measure the success of a task, how can you expect your employee to succeed in it?
Schedule evaluations every six months, or at least once a year. Do not conduct evaluations simultaneously with pay raises (because employees tend to stop listening once they hear the level of their raise). Following an evaluation with a raise several months later will give the employee time to improve their performance by the date of the raise. Otherwise, they know that nothing they do will help them get a raise and that they won’t be able to solve the problem to your satisfaction for another six to 12 months.